Telstra app start-up faces Asian hurdles

Nicole McCormick/Ovum
28 Jan 2013

announced that it will launch

There is nothing revolutionary or particularly innovative about Telstra’s announcement, with several other Asian and European telcos already having launched similar software units. The main issue for Telstra is that it does not have a large footprint of Asian affiliates (it only owns Hong Kong mobile operator CSL) to export its content to. It will also be difficult to develop apps that have widespread appeal across Asia. Telstra recognizes that it needs to collaborate more, but it will require astute execution to ensure that the correct opportunities are targeted.

GAP is an apps play aimed at enterprises

While GAP is essentially an apps-centric business unit, Telstra does not plan to develop the apps internally. Instead, the operator intends to partner with app providers and possibly acquire them. Telstra’s existing Applications and Venture Group will make any acquisitions, while GAP will be responsible for taking the services to market.

GAP has a two-pronged strategy. Firstly, it plans to acquire or partner with developers to create apps for the leading industry verticals in Australia, such as the media or mining industries. As part of this strategy, Telstra will focus on the enterprise and government sectors rather than the fickle consumer market. Secondly, the apps that have global appeal will be exported to Asia.

We agree that the consumer market should not be a priority for GAP as it would struggle to make a return on in its investments given the strong competition from OTT players. The key challenge for GAP will be identifying and meeting unmet demand in industry verticals. Telstra will need to be aware of the fact that content from some smaller verticals in Australia may not be transferrable to businesses in Asia. The operator’s view is that if an app does not have potential to scale in the Asian market, then it should not be considered as viable for export. Kate McKenzie, Telstra’s Group Managing Director for Innovation, Products, and Marketing, states that GAP will need to be “quite mindful” of what the value of a service is, and will source very “targeted opportunities.”

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